What Are Scalp Lines?
Scalp lines are temporary areas of support and resistance. As I have already explained, an S+R line needs to have a lot of history behind it to be useable. A scalp line does not need this same history. Scalp lines are formed by a single, sudden, sharp reversal. If a candle, for any reason, moves to, and then bounces away from a certain point, that point becomes a scalp line. Scalp lines can be used to take 4hr chart scalp trades. A good scalp line will have three essential parts, if a scalp line does not have these three parts I will likely not use it.
Preceding trend: The preceding trend required for a scalp line formation can be as short as a single candle, a single candle would however make for a weak scalp line. Ideally you would want to see a nice strong trend of four or more candles. The bigger and stronger the preceding trend the stronger the scalp line is. In the pics below the preceding trend is show in the blue box.
Bounce Candle: The bounce candle is the lowest point, it does not have to be a reversal candle it is just the lowest point of the trend
Reversal trend: The reversal trend confirms that the point at which the bounce candle stopped has
some strength. If there is no reversal it is hard to say that it is a valid scalp line since
How I place them
Scalp lines are even easier to place than S+R lines. Just about every week you are going to see the price bounce away from random places on the chart. This can be caused by news releases, CB intervention, or other various reasons. All you need to do is identify these bounces and place a line there. Next time the price reaches that level and breaks that line a trade is entered. There are two main types of scalp line formations, and a third weaker type of formation. ‘V’ shaped bounce: To be more accurate, the ‘V’ shape can also be an upside down ‘V’. This is the best type of formation as it shows a very sharp and quick bounce.